Business

How the Covid crisis has forced small businesses to reduce and change their spending priorities

How the Covid crisis has forced small businesses to reduce and change their spending priorities

Small businesses have experienced several crisis situations over the past two years, including cyberattacks, labor shortages, the Great Resignation, and Covid. In response to the challenges posed by the pandemic, many companies have made important decisions about their budgets, spending priorities, resources and strategies.

A new survey published today by UpCity a small business intelligence firm, shows how 600 of these business owners in the US and Canada responded to the Covid crisis and the decisions they made about their spending priorities for 2022.

With millions of small businesses headquartered in both countries, these decisions can have powerful and lasting ripple effects.

According to the survey:

  • 57% reduced spending during Covid
  • 34% increased the salary of their employees; 34% of these companies have also expanded their health benefit options, including mental health benefits
  • 28% allocated most of their budgets to marketing and advertising before Covid; post-Covid, 27% of respondents focus their budget the most on operations management
  • 27% have increased their budget for software and tools for 2022

The survey was conducted in January 2022 by Pollfish for UpCity, and has a 4% margin of error.

UpCity noted that “the pandemic has been a wake-up call not just for the workforce, but also for business owners. While many businesses were helped by government programs such as the Paycheck Protection Program, not all small businesses were covered by the PPP, and so it was difficult to maintain payroll and staff when many businesses had little or no revenue.

“While layoffs were common, many companies understood the human element involved and worked as hard as possible to retain staff and adjust policies to meet their needs.”

A surprising result

CEO of Up City Dan Olson observed that “it was not too surprising to see a majority of small businesses cut spending since March 2020, but start looking to increase spending in the coming year.

What was somewhat surprising were the areas where spending increased[ing] that were identified – only 13% of respondents identified benefits and HR payroll as an area of ​​focus in 2022. Given the big resignation, we would have thought there would have been a greater number of respondents looking to invest more in this area to retain employees through additional compensation and benefits.

Advice for small business owners

Olson said that “…while we know small businesses are probably a bit shocked by the events of the past year and a half, it’s still important to invest in your business going forward.

“In particular, investing in your people has been and will continue to be an important area…as the demand for talent continues to increase. These investments should not only be salary increases, but can also include increased benefits and the expansion of a cultural budget for events and activities,” he concluded.

Other worries

Of course, the pandemic’s impact on budget priorities isn’t the only Covid-related issue small business owners have had to worry about.

Covid has had a devastating impact on many small businesses, forcing hundreds of thousands of them to close. And then there’s the impact the disease has had on small businesses owners.

A recent investigation from Capital One Business found that many owners are burnt out. And for good reason.

According to the company, the survey found that “small business owners are keenly feeling the impact on their mental well-being and ability to maintain work-life balance as a result of navigating the disruptions associated with the pandemic and fluctuating terms across the country for nearly two years. years.

Burnout

  • 42% of small business owners said they had recently experienced burnout.
  • Burnout disproportionately affects minority business owners across the country. Sixty-two percent of them said they had recently suffered from burnout, and almost a quarter experienced almost constant mental exhaustion.

No vacation

  • More than half (52%) of business owners have not taken a vacation in the past year.
  • Many report feeling depressed and mentally drained, with 62% of business owners reporting working longer hours.

Impact on mental well-being

  • 45% of business owners say running a business during the pandemic has had a negative impact on their mental well-being.
  • A third said they could not sleep properly.

work-life balance

  • More than a quarter (26%) of business owners say their work-life balance is worse than before the pandemic.